Case Study: Accounting Equation in Action

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• Lenders use the equation to determine a borrower’s creditworthiness.
Consider a start-up, TechSolutions Pvt. Ltd., whose following transactions take place in its first month of operations:
Transaction Effect
Owner invests ₹1,00,000. Assets=₹1,00,000,Liabilities=₹0,Equity=₹1,00,000Assets = ₹1,00,000, Liabilities = ₹0, Equity = ₹1,00,000Assets=₹1,00,000,Liabilities=₹0,Equity=₹1,00,000
• Lenders use the equation to determine a borrower’s creditworthiness.
Consider a start-up, TechSolutions Pvt. Ltd., whose following transactions take place in its first month of operations:
Transaction Effect
Owner invests ₹1,00,000. Assets=₹1,00,000,Liabilities=₹0,Equity=₹1,00,000Assets = ₹1,00,000, Liabilities = ₹0, Equity = ₹1,00,000Assets=₹1,00,000,Liabilities=₹0,Equity=₹1,00,000